Morristown agrees to 30-year tax break to M Station project developers


Morristown agrees to 30-year tax break to M Station project developers

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The proposed redevelopment project is set to revitalize downtown and draw in Fortune 500 companies to over 350,000 sq ft of office and retail space.

Morristown Daily Record

MORRISTOWN — Town officials took the first step on Tuesday to approve a financial agreement for Morristown’s largest development project in 30 years.

Pending a public hearing next month, Mayor Tim Dougherty and council members voted 6-1 to move forward with a 30-year tax break for M Station project redevelopers Scotto Properties and SJP Properties. During Tuesday night’s virtual town meeting, Dougherty said the decision is “the best deal for the town” after the economic impacts of COVID-19 shutdowns.

“The fiscal benefits to our residents are clear. Fiscal responsibility and leadership mean making the best deal for our town under these circumstances. Let’s not lose sight of what’s at stake,” Dougherty said. 

During Tuesday night’s virtual town hall meeting, Morristown officials discuss the M Station financial agreement. (Photo: Jessie Gomez)

The agreement, presented by the town’s financial consultant, Robert Powell, offers redevelopers a 30-year PILOT, or payment in lieu of taxes, which is a percentage of annual gross revenue paid to Morristown and typically is lower than taxes. The project will be completed in two stages, with the first building commencing construction by the end of the year.

M Station is expected to generate over $1 million for the town annually — 4½ times more than the current revenue — with minimum payments increasing over 30 years. In addition, the project will contribute $2.5 million to the town’s affordable housing trust fund.

“Are PILOTs always the answer? Only when absolutely necessary to implement a project that’s the right fit for our town,” Dougherty said. “Well-negotiated PILOTs can be powerful tools to encourage redevelopment and generate resources that benefit all residents.”

In January, M Station signed multinational professional services company Deloitte as its first tenant, securing more than 110,000 square feet of space. The lease is contingent on full municipal approvals for the project. 

M Station project rendering for Morristown. (Photo: Courtesy)

Within the past year, the community has expressed strong opinions regarding M Station. Proponents of the project say it will bring “world-class companies” such as Deloitte. But at a council meeting last year, residents and business owners called the project “heartless” after decades-long businesses at Midtown Shopping Plaza were forced to move out. Scotto properties emptied the building to prepare for demolition and construction. 

“We’ve seen a very positive reception in the market for M Station among potential tenants and the commercial real estate brokerage community, and are actively engaged in numerous discussions about potential requirements,” SJP Properties said via email on Wednesday. “M Station is the only new construction, headquarters-quality commercial development of scale being delivered to a New Jersey downtown market in the current environment, which makes it a unique opportunity for companies that are forward-looking about their business needs.”

During Tuesday night’s virtual town hall meeting, Morristown officials discuss M Station and its financial agreement. (Photo: Jessie Gomez)

Powell also noted a number of project benefits to the town, including an increase in municipal revenue, 1,400 new local jobs, over 100 new construction jobs, increased demand for retail and restaurants, and support for residential demand and property values. Councilman Robert Iannacone was the lone no vote on the agreement and expressed issues with the arranged PILOT and the project’s phasing, which was originally not part of the plan.

“This is a financial arrangement that has to last for 30 years, and what happens after 30 years? Because this building is going to be here a lot longer than 30 years,” Iannacone said.

The M Station proposal is to build two six- and seven-story buildings, M Station East and M Station West, totaling over 350,000 square feet of office and retail space on Morris and Spring streets. It also calls for a new parking structure with 900 spaces and a 45-foot-wide Morris Street Promenade. The area was deemed a location in need of redevelopment by the town in 2008. Stage 1 of the project will begin with building Deloitte’s space, starting later this year. The town’s Planning Board awarded project approval in June after seven public meetings. Public comment on the financial agreement will take place Oct. 13 during the town’s virtual meeting. 

“Failure to move forward in a timely matter will jeopardize our project. M Station can be the keystone to our recovery, and we need to act accordingly,” Dougherty said. 

Jessie Gomez is a local reporter for DailyRecord.com and NorthJersey.com. For unlimited access to the most important news from your local community, please subscribe or activate your digital account today.

Email: jgomez@gannettnj.com

Twitter: @jessiereport 

Read or Share this story: https://www.dailyrecord.com/story/news/2020/09/23/morristown-gives-30-year-tax-break-m-station-project-developers/3502535001/




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